Previous Day Highlights

FBM KLCI ended lower for 5 continuous trading days despite the strong regional performance. The benchmark index eased 0.39% or 5.55 points to close at 1,417.37. Losers were led by PETDAG, HLFG and SIMEPLT. Market breadth was negative with 547 losers against 304 gainers while 411 remain unchanged. Total volume stood at 2.66bn shares valued at RM1.41bn.

Key regional markets rallied after China's central bank decided to keep the interest rate unchanged. Nikkei 225 and STI rose by 0.81% and 0.19% to end at 29,626.34 and 3,214.72. Meanwhile, HSI and SHCOMP soared 1.75% and 1.17%, respectively to end at 19,971.13 and 3,310.74.

Wall Street closed higher yesterday reversing consecutive days of decline. The DJIA and S&P 500 increased 0.14% and 0.30%, respectively to end at 33,348.60 and 4,136.28 whereas Nasdaq added 0.66% to close at 12,365.21.

News For The Day

HLBB announces Kevin Lam as new group MD and CEO

Hong Leong Bank (HLBB) announced Kevin Lam Sai Yoke as its group managing director and chief executive officer, effective July 1. The group said that Lam will replace Domenic Fuda who retires as group MD and CEO on June 30. Lam has over 30 years of banking, technology and leadership experiences across regional and international banks in several geographies. -The Edge Markets

Samchem’s 1Q net profit down by lower sales, margins

Samchem Holdings’ 1QFY23 net profit tumbled 66.64% YoY to RM6.54m against RM19.59m, weighed down by lower sales volumes and margins. The integrated chemicals and lubricants distributor registered a lower revenue of RM255.39m, down 29.94% YoY from RM364.51m, amid decrease in average selling price and sales volume. - The Edge Market

Teo Seng Capital continues to adapt to challenges

Teo Seng’s 1QFY23 net profit surged to RM19.7m from RM4.2m YoY driven by improved selling prices of eggs, increases in sales quantities, and higher contributions from sales of old hens. Its revenue for the period jumped 24.5% YoY to RM183.4m versus RM147.4m. The egg subsidy granted by the government cushioned the impact of the continued high feed cost. Teo Seng declared a first interim single-tier dividend of 2.0 sen per share amounting to RM5.9m in respect of the current financial period under review. -The Star

CapitaLand Malaysia buys RM39.7m freehold warehouse

CapitaLand Malaysia Trust (CLMT) is adding a freehold logistics warehouse located at at the Hicom-Glenmarie Industrial Park in Shah Alam, Selangor, to its portfolio for RM39.7m, and convert it into a temperature-controlled distribution centre. Its trustee, MTrustee, has inked a sale and purchase agreement to acquire the property from Cynnyx SB. The purchase price is in line with the property's independent market valuation, commissioned by the trustee, of RM40.4m, CMRM said.-The Edge Markets

Menang Corp's 3Q earnings ease 28% on rising cost of sales

Menang Corp (M) saw its 3QFY6/23 net profit fell 28% YoY, as cost of sales rose in a larger quantum than the increment in the group’s revenue. Net profit dropped to RM3.28m for the quarter under review, even though revenue grew 3.1% YoY to RM22.17m from RM21.51m.-The Edge Markets

Our Thoughts

Wall Street closed on a positive note as negotiations on the US debt ceiling will resume today with the Feds being rather optimistic that a deal can be struck soon rather than later. As such, the DJI Average gained 48 points while the Nasdaq jumped 80 points higher as the US 10-year yield edged higher at 3.508%. Meanwhile, Hong Kong market rallied on hopes of strong quarterly earnings from both Tencent and Alibaba and that banks and insurers will benefit from government’s initiatives to boost the valuations of state-owned enterprises thus pushed the HSI 344 points higher to almost the 20,000 level. On the domestic front, the FBM KLCI continued with its downtrend despite the improved regional performance as broad-based selling remains. However, we reckon bargain hunting activities should emerge anytime soon following the week-long decline and expect both the Banks and Telcos to be top of the buying list. As such, we anticipate the index to trend within the 1,415-1,425 range today.

Source: Rakuten Research - 16 May 2023

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